Alfredo L. Villamor, Jr.

,
v.
John S. Umale, In Substitution Of Hernando F. Balmores
G.R. No. 172843
September 24, 2014

Facts

Pasig Printing Corporation had the option to lease a prime property owned by Mid-
Pasig Development Corporation (Mid-Pasig), which by a resolution of its board of directors
waived to Atty. Villamor’s lawfirm. Atty. Villamor is also a director of PPC. PPC entered into an
agreement with MC Home Depot, wherein, MC Home Depot would continue to occupy the area
of PPC, and issued checks that were given to Atty. Villamor who did not turn these or the
equivalent amount over to PPC, upon encashment. Balmores, a stockholder and director of PPC
wrote a letter addressed to PPC’s directors informing them that Villamor did not turn these or
the equivalent amount to PPC. Due to the alleged inaction of the directors, respondent
Balmores filed with the RTC and intra-corporate controversy against petitioner for their alleged
devices or schemes amounting to fraud or misrepresentation detrimental to the interest of the
corporation and its stockholders. RTC denied the petition, but CA reversed the decision.

Issue: Whether or not the action is correctly characterized as a derivative suit.

Ruling: No.

The fifth requisite for filing derivative suits, while not included in the enumeration, is
implied in the first paragraph of Rule 8, Section 1 of the Interim Rules, i.e., the action brought
by the stockholder or member must be in the name of the corporation. In derivative suits, the
real party in interest is the corporation, and the suing stockholder is a mere nominal party. In
effect, the suit is an action for specific performance of an obligation, owed by the corporation
to the stockholders, to assist its rights of action when the corporation has been put in default
by the wrongful refusal of the directors or management to adopt suitable measures for its
protection. An allegation that appraisal rights were not available for the acts complained of is
another requisite for filing derivative suits under Rule 8, Section 1(3) of the Interim Rules.
Under Sec. 81 of the Corporation Code, any stockholder of a corporation shall have the right to
dissent and demand payment of the fair value of his shares in the following instances: (a) In
case any amendment to the articles of incorporation has the effect of changing or restricting
the rights of any stockholders or class of shares, or of authorizing preferences in any respect
superior to those of outstanding shares of any class, or of extending or shortening the term of
corporate existence; (b) In case of sale, lease, exchange, transfer, mortgage, pledge or other
disposition of all or substantially all of the corporate property and assets as provided in this
Code; and (c) In case of merger or consolidation. In this case, respondent failed to implead PPC
(corporation) as a party, or include a statement that respondent was filing the complaint on
behalf of the corporation, and allege that appraisal rights were not available for the acts
complained of.